Report Title:

Department of Education; Budget and Finance System

Description:

Establishes a systemwide education budget based upon school complex organizational structure; earmarks a percentage of the state general fund for education beginning with the 2005-2007 fiscal biennium; requires the board of education to establish an integrated financial management system and budget based upon school complex organization and performance goals; establishes a joint education finance task force to determine adequate levels of state funding for public schools system.

THE SENATE

S.B. NO.

352

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO EDUCATION.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 37, Hawaii Revised Statutes, is amended as follows:

1. By amending section 37-41.5 to read:

"§37-41.5 Department of education; carryover of funds. (a) The department of education may retain up to five per cent of any appropriation, except for appropriations to fund financing agreements entered into in accordance with chapter 37D, [for the school-based budgeting program EDN 100 and for the comprehensive school support services program EDN 150 at the close of a fiscal year] in each school complex and the funds retained shall not lapse until June 30 of the first fiscal year of the next fiscal biennium. The department of education shall submit:

(1) A report to the director of finance ninety days after the close of each fiscal year, which shall be prepared in the form prescribed by the director of finance and shall identify the total amount of funds that will carry over to the next fiscal year; and

(2) A copy of this report to the legislature, as well as a report identifying the carryover of funds on a school-by-school basis, at least twenty days prior to the convening of the next regular session of the legislature.

(b) Any appropriation retained in accordance with this section shall be used exclusively for [the school-based budgeting program EDN 100 and the comprehensive school support services program EDN 150,] school complex-based instructional goods and services and of those appropriations allocated to the schools, funds shall remain within the budget of the school to which they were originally allocated; provided that the retention of an appropriation shall not be used by the department as a basis for reducing a school's future budget requirements.

(c) For the purposes of this section, "school complex" means a high school and its geographically contiguous intermediate or middle and elementary schools as defined by the department for instructional, administrative, and organizational purposes."

2. By adding a new section to part V to read:

"§37-   General fund; minimum appropriation for education. (a) Beginning with the 2005-2007 fiscal biennium, not less than     per cent of the state general fund shall be appropriated by the legislature in any fiscal year for the statewide education budget. The legislature may appropriate additional general funds beyond this amount, based upon estimates of growth in general fund receipts reported by the director of finance and the council on revenues, to meet increased demands for educational services based upon unanticipated growth in student enrollment, or for public health and safety issues as determined by the board and reported to the governor and the legislature. Any such additional appropriations shall not cause the general fund expenditure ceiling to be exceeded except pursuant to section 37-93.

(b) Beginning with the 2003-2005 fiscal biennium, no reductions or restrictions shall be made by the legislature, the governor, the board of education, or the superintendent of education to general or federal fund appropriations, allotments, or allocations due to the receipt of private grants or donations by an individual public school or school complex. For the purposes of this section, "school complex" means a high school and its geographically contiguous intermediate or middle and elementary schools as defined by the department for instructional, administrative, and organizational purposes."

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended as follows:

1. By adding a new section to be appropriately designated and to read:

"§302A-   Education finance system; biennial education budget; performance goals. (a) Beginning with the 2003-2005 fiscal year, the board of education shall direct the development and implementation of an integrated financial management system based upon amounts allocated to and expended by each school complex. The integrated financial management system shall link appropriations, allocations, and expenditures to school complex performance goals and shall provide reports on amounts allocated and expended in the following cost centers: administrative, instructional support, and classroom personnel; behavioral health personnel; instructional goods and services; personal services contracts; facilities repair and maintenance projects; and a pro-rata amount for board and state administrative personnel and functions.

(b) Beginning with the 2005-2007 fiscal biennium, the board of education shall direct the development and implementation of a statewide biennial education budget reflecting anticipated financial requirements for each school complex, for the following cost centers: administrative, instructional support, and classroom personnel; behavioral health personnel; instructional goods and services; personal services contracts; facilities repair and maintenance projects; and a pro-rata amount for board and state administrative personnel and functions.

(c) Beginning with the 2005-2007 fiscal biennium, the education budget shall further include for each school complex annual performance goals linked to student achievement of the Hawaii content and performance standards. These performance goals shall be based upon an individual school's achievement of the content and performance standards within their respective school complex. These performance goals shall be measured using statewide student assessments and other indicators of achievement of the goals adopted by each school complex. Beginning with the 2007-2009 fiscal biennium, the education budget shall also include each complex's progress in achieving their annual performance goals."

2. By amending section 302A-101, by adding a definition of "complex-based budget" to be appropriately inserted and to read:

""Complex-based budget" means a budget preparation and execution process that allocates funds for personnel, procurement of instructional goods and services, other personal services contracts, and school facilities repair and maintenance projects displayed by school complex."

3. By amending section 302A-1102 to read:

"[[]§302A-1102[]] Department of education; statewide and [regional administrative services.] school complex administration. (a) The department shall serve as the central support system responsible for the overall administration of statewide educational policy, [interpretation, and] development of standards for compliance with state and federal laws, and coordination and preparation of a systemwide complex-based budget and financial management system for the public schools. The department [may] shall establish [regional administrative] school complex units to provide [administrative support to the schools for] personnel, fiscal, and procurement services[. The regional administrative units may also be assigned responsibility for the administration and operation of special education programs and special schools.] to each school complex."

4. By amending section 302A-1301 to read:

"[[]§302A-1301[]] School system [financial accountability.] administrative overhead; transfer of funds. (a) Beginning with the [1995-1997] 2005-2007 fiscal biennium, the department's administrative expenditures shall not exceed [6.5]      per cent of the total [department operating] education budget unless approved by the legislature.

(b) The department shall not transfer any funds appropriated [under the school-based budgeting program EDN 100 of the state budget,] to each school complex except for unforeseeable circumstances that pose a threat to the health and safety of personnel and students, and subject to approval by the governor and notification to the legislature."

5. By repealing the definitions of "EDN 100", "regional administrative unit" and "school-based budget flexibility".

[""EDN 100" means the budget program identification number for the school-based budgeting program within the department.

"Regional administrative unit" means a grouping of complexes established by the department for administrative support and organizational purposes.

"School-based budget flexibility" means an operating budget preparation and allocation process that provides maximum flexibility to individual schools, complexes, and learning support centers in the preparation and execution of their operating budgets."]

6. By repealing sections 302A-1104, 302A-1201, 302A-1302, 302A-1303, 302A-1306, and 302A-1307.

["[§302A-1104] Learning support centers. Beginning with the 1995-1996 school year and until June 30, 1999, school-level support for curriculum and instruction shall be provided through learning support centers to be governed by schools within each complex. The centers shall assist school personnel in the delivery of instructional services by providing support through curriculum development, student assessment, staff development, and resource allocation. The types of services offered and the manner in which these services are provided by the centers, as well as the prioritization and allocation of available resources, shall be determined by policies established by each complex. Any regional administrative units established by the department shall be assigned all administrative functions and provide administrative support to the learning support centers.

[§302A-1201] Definitions. For the purposes of sections 302A-1306 to 302A-1309:

"Enrollment" means the number of students registered in the regular public schools, with each regular student and each special student being counted as one.

"Moneys" means funds which are not committed to positions.

§302A-1302 School-based budget flexibility. Beginning with the 1995-1997 fiscal biennium, the department shall implement school-based budget flexibility for schools, complexes, and learning support centers. The flexibility shall be limited to the school-based budgeting program EDN 100 of the department for all schools except new century charter schools defined in section 302A-101 and new century conversion charter schools defined in section 302A-1191; provided that beginning in fiscal year 1998-1999, and every year thereafter, the department shall distribute the full appropriation due to a new century charter school or new century conversion charter school pursuant to sections 302A-1185 and 302A-1191, directly to the new century charter school or new century conversion charter school.

[§302A-1303] School budget, general fund. The salaries of the superintendent, teachers, office force, and all other employees of the department, and all items of general expense, including books, materials, supplies, and equipment, shall be included in the departmental estimate in such form and detail as the director of finance shall require, together with such statistical and supporting data as the director may request.

[§302A-1306] School priority program; established. (a) There is established within the department a school priority program to augment regular instruction and other educational services at the discretion of the individual public schools. Further, it is the intent of the legislature that the school priority program promote the equitable distribution of educational resources statewide, strengthen the scope of decisionmaking, increase flexibility in resource allocation at the school level, and provide a systematic method of conforming resource allocation to the unique needs and priorities of individual schools.

(b) All moneys to carry out the purposes of the school priority program under this section to section 302A-1309 shall be allocated by the legislature through appropriations out of the state general fund.

(c) The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section to section 302A-1309.

[§302A-1307] Distribution of resources. The superintendent shall allot the moneys of the school priority program to the school districts based on enrollment. In the allotment of positions to the districts, the superintendent shall calculate each district's entitlement based on enrollment and may deploy one instructional resource augmentation position for each two hundred fifty students enrolled in each school; provided that all positions shall be deployed."]

SECTION 3. Joint Education Finance Task Force. (a) There is established a joint education finance task force (task force), comprised of members of the senate and the house of representatives, and designees from the board of education, the department of education, and the governor's executive administration. The president of the senate and the speaker of the house of representatives, each shall appoint four members from their respective body, including the chair of the senate education committee, the chair of the house lower education committee, the chair of the senate ways and means committee, and the chair of the house finance committee. The board of education shall appoint one member, the superintendent shall appoint two members, and the governor shall appoint one member.

(b) The task force shall convene upon adjournment sine die of the regular session of 2003. The task force shall meet at least once per quarter to discuss issues related to the financing of the kindergarten through grade twelve public education system. The task force shall discuss and make recommendations to the legislature regarding: the need for a dedicated source of state revenues earmarked for the public education system; models of adequate levels of state funding to support student achievement on an equitable basis; and an integrated financial management system to support more efficient and effective use of state, federal, and other funds supporting the public education system.

(c) The task force may request assistance from the superintendent of education, the University of Hawaii college of education, the Hawaii educational policy center, the legislative reference bureau, and other entities with knowledge about state education finance issues.

(d) The task force shall submit an interim report to the legislative leadership, the board of education, and the governor prior to the convening of the 2004 regular session, and a final report prior to the convening of the 2005 regular session.

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

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